First Home Buyer

These days, owning your own home is no easy feat. You need to save for a deposit, get the right loan and find the perfect home. By following the simple steps below, you can move from being a 'home dreamer' to 'home owner' and enjoy the rewards of owning your own home.

Owning your own home is a great dream. But don't be fooled. It will require you to make some major sacrifices and finding a home requires discipline and effort, not to mention cash.

But with some determination and help from the government Australia-wide, you can get on the road to home ownership. I'll outline 9 basic steps which will help you achieve your dream.

STEP 1 - HOW MUCH CAN YOU BORROW?
You should determine how much you can borrow. This amount will vary from lender to lender, and many lenders now offer online calculators that allow you to determine your borrowing limit.

You can also ask any mortgage broker, who will have a good idea of how much the lenders on their panel will lend to you based on your income, debts, assets, number of dependants and whether you are buying the property alone or with somebody else.

STEP 2 - CLAIM GOVERNMENT GRANTS
There are several rebates available for first home buyers from the state and federal governments.

They have called this the First Home Owner Grant. The biggest windfall for you as a First Home Buyer is the Federal Government's First Home Owner Grant scheme (FHOG). The scheme was introduced in July, 2000, by the Federal Government and involves a tax-free grant of at least $7,000 to first home buyers. In some states is is as much as $10,000 Eg. VIC

STEP 3 - HUNTING FOR A HOME LOAN
Which loan features do you fancy?

As a potential borrower in the market, you need to educate yourself about the different home loans which are available from all the lenders. You need to decide which loan features you think you may need. If you'd like the security of knowing exactly the amount of your repayments, then a fixed loan could be for you.

If you think interest rates could fall in the future, then a variable rate might be more suitable. Once you've determined the type of loan that best suits your needs, it's time to go mortgage shopping.

You'll need proof of income such as pay slips or recent tax returns, proof of your savings and other documents such as I.D. that may be required by specific lenders or brokers.

STEP 4 - GET A PRE-APPROVAL
Having found the best possible deal, it's time for you to apply for a home loan, attend a loan interview and get approval. Make sure you have all the necessary documents ready for your broker. Procedures vary from lender to lender, but it is likely you will be issued with a 'pre-approval certificate'.

This means that, subject to a few conditions, your home loan has been, or will be, approved when you find the property you want to purchase. One of the main conditions is often a valuation of the property to ensure that you aren't paying too much for a property.

I have found that a major benefit of my clients being pre-approved for a home loan is that they know exactly how much they can and can't borrow, as well as how much their repayments are going to be. To get a rough idea of your new mortgage repayments go to. Also it gives you an additional bargaining leverage when competing with other prospective buyers for a home.

A home seller may be more likely to accept an offer from a pre-approved borrower, because the seller knows the buyer can get a loan. Also when you make your offer on the property you can offer CASH, which will give you a fair bit more baragining power when it comes to the price.

STEP 5 - FINDING YOUR HOME
Now that you know your borrowing power, it's time to determine how much 'home' it's likely to buy you and in which suburbs you can afford to live. The real estate section in newspapers, the Internet (www.realestate.com.au), local papers and real estate agents are all useful sources of pricing information.

Once you have settled on an area, you should tell a few real estate agents what you are looking for so that they can put their 'feelers' out for you. Remember, real estate agents are employed by the vendor, so make sure you do your own research as well.

STEP 6 - DON'T FORGET BUILDING INSPECTIONS
Anyone buying a home should have it inspected for faults. Make sure the property you buy isn't a dud - and there are plenty out there, especially in cities where housing stock can be very old and run down.

There are number of different inspections to be made depending on the type of property, including:

• building inspections
• pest inspections
• electrical inspections
• strata inspections and
• a land/property survey

These inspections are likely to cost anywhere between $200 and $600 each. Don't baulk at the cost. It is vital that you find out about any hidden nasties like damp, shifting foundations, faulty wiring and plumbing. Then you can factor in the cost of repairs to the purchase price or decide to drop the deal altogether.

STEP 7 - MAKING AN OFFER
After your inspections, if you're still satisfied with the property, it's time to make your next move. While it is important to be cautious in approaching price negotiations, don't be too inflexible. After all, you want this property. The last thing you want is someone beating your best bid by a few hundred dollars, knowing that the property is worth much more.

The most common way to buy property is by sale through a real estate agent. If a property isn't going to auction, you are saved from the stress of auction day, but are then faced with the daunting question of how much should you offer?

If a home price tag says $250,000, this may not be how much the vendor really wants. Many agents say that it's usually wise to make a lower offer within 5 per cent of the asking price, although this percentage can increase in a slow market.

Once your offer is accepted and you've accepted the sale contract, it's time to pay the deposit. This is typically given to the real estate agent, who holds it on behalf of the vendor in a special trust account until the sale is finalised.

STEP 8 - LEGAL LEGWORK
You will need to arrange conveyancing, which is the transfer of property title from one person to another.

Most people employ a solicitor or conveyancing expert. The services of a conveyancing specialists cost between $500 - $1,500 and the fee will usually include survey, building and pest reports. Conveyancing fees cover all the costs of the transfer of property, except for stamp duty, and most conveyancing firms will give you a free quote.

STEP 9 - SETTLEMENT AT LAST
Settlement day is the day that your settlement agent meets with the vendor to swap your cheque with their title of ownership. Government departments need to be notified of the change in ownership, and this is typically taken care of by your solicitor or conveyancer.

You should have the building insured at the time of settlement otherwise some lenders won't lend you money.

Enjoy the feeling! Congratulations, you are now the proud owner of your new home and you're on your way to building your 'Property Portfolio' No more being looked down upon by property owners.

Buying your first home is a major achievement and it involves time and effort. Invest those factors, and the payoffs could be huge. Mistakes will be made and lessons will be learnt, but isn't that what life is all about?

If You would like to be shown how much you can borrow and what your repayments will be on the debt, simply send me an email asking for a No Obligation FREE Quote Now!